A look at some of the developments in England that are driving the auto industry there—and abroad. The indigenous OEMs may be small or just memories, but the transplants and the supply base are hard at it. Here's a look...

"We see the future as being based increasingly on alliances," says Roy Stanley, corporate director atExpress Group(Team Valley, Gateshead, England), a firm that itself is an organization of companies that each performs functions within a product and process supply chain, functions that can be utilized by a customer separately or collectively. The firm's original business, established 25 years ago, was to provide engineering services, including the fabrication of tooling.

But in its current incarnation, it is capable of providing wall-to-wall design, engineering and manufacturing capabilities. The group includes:

What's more, Stanley explains the firm's strategy is one that looks to form joint ventures with other companies in other parts of the world. These alliances will provide Express Group with additional capabilities, resources and market access, and the Express Group will provide the same for those firms with which it works.

Last year, for example, it established a joint venture with Omega Plastics of Clinton Township, Michigan, a firm that specializes in both the development of injection molding tooling machined from aluminum (thereby making it possible to rapidly produce tooling that's capable of producing limited-volume runs) and low-volume production (e.g., 20,000) with the tooling. The joint venture provides Omega with a base in the U.K., which is a good location vis-a-vis supplying product throughout Europe, and it provides Express Group with entrée into the U.S. The drive for affiliations is something that Stanley believes will propel the firm forward in this era of supplier consolidation.

Another joint venture, this one having the Express Group team with Tyneside Training and Enterprise Council, is Learning Dynamix, a training outfit.

Beyond "Art to Part"

It could be a clever marketing slogan: "Mind to Market." The Express Group has even registered that phrase in order to assure that it can use it to its own best advantage in the market. But more than a clever phrase, it is, explains Roy Stanley, descriptive of the suite of capabilities that the Express Group can bring to the market, with the market being, so far as the auto industry is concerned (it represents 20% of the firm's business now and they fully expect it to reach 40% of sales within two years), high-level suppliers (e.g., TRW) and OEMs (e.g., Nissan). "We make bits that people put on their bits," Stanley says of one important part of the group's business. Presently, the company's turnover is on the order of 100 British pounds. Stanley projects that it will be 500 million pounds in 2005. Isn't that a bit aggressive? "We've done it [i.e., grown at that rate] for the last 10 years," he answers.

Back to "Mind to Market." Stanley says that their research shows that for consumer durables (not automotive, but the factors certainly apply), the product development time is on the order of 52 weeks. The Express Group is organized with businesses and resources to cut that time in half. "People talk concurrency. But unless you set your company up that way, it is hard to achieve," he remarks. Indeed, Robin Mackie, the group's design director, adds that the plan is to shoot for a development time—as in from the concept to the creation of parts (a.k.a., mind to market)—that falls within a 12- to 14-week window. (Mackie's strategy is largely based on leveraging networked computer resources, both those within, say, the XPD organization, as well as at alliance or customer sites.)

You Don't Often Hear This

According to Ron Stanley, Express Group management spent 2.5 years studying the U.S. automotive market. They determined, not surprisingly, that it represents "a big business opportunity."

But he adds, "One reason we decided to go to the U.S. is because we like it."

That is, these people from the northeast of England enjoy visiting the U.S. and working with Americans.

As Stanley correctly points out, "If you're in business, you need to enjoy what you are doing."

They enjoy the U.S. and its people. So the Express Group wants to do work in the U.S.

Five Things

The observations of the present automotive landscape have led the people at the Express Group to conclude that five things are happening that will affect their business, as well as the businesses of other supplier companies:

Reduced supply base. This is true for not only the OEMs, but for the first tier suppliers, too. For example, they think that Valeo will be going from 5,000 suppliers to just 200 within five years. Implication: Only the capable will continue.

Non-core goes out the door. If the tasks or operations aren't germane to what a given company does best or is most important to the fundamentals of that company, then those tasks and operations will be outsourced. Implication: Considered in relation to the previous point, there are more opportunities for fewer companies in the supply chain.

Time compression. It's the era of fast cycle time. Customers want it now. And different. Implication: Time is truly of the essence.

Value-added activities count. Not only must it be done right and quickly, there are cost considerations, too. If something doesn't add value, it adds unnecessary cost. Implication: Vigilance to detail is important.

Shared risk. As OEMs and upper level suppliers are looking for future contractual cost reductions, this means that the supplying company is betting, in effect, that it will be able to reduce its costs in future years. If those reductions can't be achieved, then the supplier loses. Implication: If you want to sit at the table, then you've got to be willing to place your bets on your abilities.

Pick Your Targets

"When you're a second tier supplier, you can't afford to invest in everything," Stanley observes. (One suspects that not even an OEM can do that nowadays.)

John D. Pearson, managing director, Stadium Plastics (North East), which is located in Hartlepool, England, comments, "We want to put our investments in manufacturing." Stadium, which has a turnover of 90 million British pounds, is in two businesses: plastic injection molding and electronics manufacturing. In its plastics business, which accounts for about a third of the company's total sales, a large percentage is for automotive; it is mainly the production of interior trim components for both automakers and first tier suppliers. So the Stadium strategy is to invest in its ability to produce parts, to invest in its manufacturing infrastructure.

But there is a recognition, Pearson acknowledges, that it isn't enough to be just a capable producer. It's important, but not sufficient. Design and engineering are also capabilities that are necessary for a competitive position. But, to echo Stanley, "You can't afford to invest in everything."

In Stadium's case, the investment in injection molding machinery and equipment is thought to be more valuable than investment in computer hardware and software for design and engineering. (And, it must be stressed, that beyond the investments necessary for the technology, there must be capable, skilled people available to operate it with effectiveness—and they don't come cheap.)

So the approach Stadium is taking is to align itself with the Express Group. Which provides it with design and engineering capabilities. So far as customers are concerned, they continue to work with the people at Stadium, with whom they are familiar. The association with the Express Group is essentially transparent.

The relationship that exists between the firms, according to both Stanley and Pearson, is one based on a handshake rather than an array of contractual agreements. "If you ever have to go back to a legal document," Stanley observes, "you've lost it." Relationships, so far as they are concerned, are based on trust and mutual understanding.

Stanley asks, rhetorically, "What do you want to own?

"Who do you want to have alliances with?"

The owning of the core capabilities are key. The alliances are strengthening.

Drive Naked

Anthony Hussey, director, Connolly Leather Ltd. (Wimbledon), suggests that if a person is driving a vehicle that has leather seats properly prepared, then driving sans clothes—while not legal—provides the fullest appreciation of the natural material.

Hussey knows more than a little about leather, as his family has been running Connolly Leather since 1878; he represents the third generation, with the fourth now coming into place. He notes that Connolly leather has been standard on vehicles built by Rolls Royce, Bentley, Aston Martin, Ferrari, Jaguar, and Morgan from the time of the first models of each up to the present. Among cars that are more affordable that include Connolly leather are the Lincoln Continental, Pontiac Bonneville, and Chrysler Viper. The company's facility in Wimbledon, which the firm purchased in 1920 ("This place stinks of atmosphere," Hussey says with affection), is capable of handling 17,000 hides per week; a new facility southeast of London that they're moving into ("A right boring shed," as Hussey, who appreciates atmosphere, puts it) will be capable of processing 20,000 per week easily and as many as 35,000 if pushed. (A Rolls has from 17 to 20 hides per car: "It's like driving around in a large handbag," Hussey quips. A more conventional vehicle has from 1.5 to 2 hides.) Hussey recognizes that it is important for the company to be as efficient as possible in order to stay competitive; he maintains that even in the vintage facility they are more competitive than other firms in the business.

"We've had to go global like everyone else," Hussey says. They've set up a finishing and cutting facility in the Detroit area; Connelly has a manufacturing plant in South Africa.

Although the objective is to maintain a position at the top end of the market, there was a recognition that they had to go down market (comparatively speaking, that is). So they have established what Hussey calls a "diffusion brand," which is called "Ashbury by Connolly."

Looking AheadThe U.S. has its Partnership for a Next Generation Vehicle (PNGV) program through the United States Council for Automotive Research (USCAR); the U.K. has its Foresight Vehicle that's being orchestrated by the LINK program, which is sponsored jointly by the Department of Trade and Industry (DTI); the Department for the Environment, Transport and the Regions (DETR); and the Engineering and Physical Sciences Research Council (EPSRC), with support from the Ministry of Defence as needed. Overall, there are 250 organizations involved in the Foresight Vehicle program.

While the PNGV program is targeted at having a mid-size car that's capable of being put on the road by 2004, the Foresight program is looking further ahead: the year 2020. And as for the vehicle, it could be any of a variety of things: car, truck, commercial vehicle, bus, taxi...

And another difference seems to be that whereas PNGV seems heavily oriented toward the vehicle manufacturers, the slant of Foresight is toward the supply base. According to David Golding of the Automotive Directorate of DTI, "We're developing an efficient, clean, safe vehicle that will be integrated with future transportation systems in order to stimulate the U.K. supplier base for component systems." Presumably, the focus on the supply base has something to do with the fact that with the exception of small specialty manufacturers, the U.K.'s auto industry is largely based on the supply base (e.g., according to figures from Barry Cole, head of the International Components Team, Automotive Directorate, DTI, of the world's top 20 first-tier suppliers, 18 have a U.K. manufacturing presence).

As of November 1998, there were 32 Foresight projects underway, looking at a variety of aspects of the future of transportation. Among them:

PAAS: Pre-treatment and Adhesive Systems for Lightweight Composite Body Panels. Aimed at developing techniques to join polypropylene materials.SCOFRAME: Design and Development of Structural Thermoplastic Composite Bus Chassis. Developing hybrid thermoplastic glass fiber technology for producing structural chassis modules for medium-volume applications.EMECMOLD: Low-cost Automatic In-Mould Embedding of Electronics Within Automotive Polymer Mouldings. For creating a process to put electronic elements in large plastic automotive components during production.COGENT: Implementing a step change in supplier co-development capability. To not only create a means by which suppliers can do co-development, but to also create an on-going continuous improvement process.SUPPLY CHAIN 2001+: Improving the performance and international competitiveness of the UK supply chain through the development of diagnostic, problem solving, change management, and decision support tools.LEAP: Lean Processing Programme. Applying lean methods throughout the supply base.SALVO 6: Structurally Advanced Lightweight Vehicle Objective. Demonstrating manufacturing options for polymer-clad aluminum space frame vehicles.LIVEMAN: Advanced Joining Processes for Lightweight Vehicle Manufacture. Reducing the weight of steel structures.3DAYCAR: To explore the possibility of setting up a supply chain that could deliver a custom vehicle within three days of order.CUPID: Customer Satisfaction Processes in Design. Translating customer wants into design and engineering objectives.Getting ThereThere are two types of travelers: Those who can sleep on planes and those who can't.

If you fall into the latter category and if you have to fly to Europe, there's one thing that you might want to arrange, finagle, or otherwise secure: a first-class reservation on British Airways.

In a word: Unbelievable.

Now, when you fly from Detroit to London, you leave in the evening and arrive in the morning. If you are going to have meetings the following day, shut-eye is essential. So in order to facilitate sleeping, British Air offers the option of eating in a private dining room in the terminal prior to the flight, thereby eliminating the need to wait for on-plane service.

But the truly astonishing part is the seating. You are in something of a personal cock pit that was created by a yacht designer. By manipulating the seat buttons, you can create a horizontal surface that's 6 ft, 6 in. long. There is not only a substantial blanket (as compared to the wash cloth-sized things often passed out by airlines), but a duvet and even pajamas. This flat surface isn't ideal, but it is as close as you are likely to come on an airplane.

If you are in the can't-sleep-on-planes category, this seat probably won't change that entirely, but you surely will get awfully close to something resembling rest.

There is, of course, the issue of price. Although prices vary, you can be certain that it is not a figure for the faint of heart.

And there is one huge drawback: We were lucky enough to fly over first class. But it was coach on the way back. Comparatively speaking, we felt like we'd gone from the lap of luxury to the cargo hold—and coach on British Air ain't all that bad.

Getting BetterThe Society of Motor Manufacturers and Traders (SMMT), which was established in 1902, is a trade association consisting of UK manufacturers, design engineers, importers, consultants, distribrutos, and others who "have a significant financial involvement in the motor industry."

Like trade associations in the U.S., SMMT does things like lobby the government, conduct public information campaigns, and organizing trade visits, such as the attendance of a contingent of U.K. suppliers at the SAE Congress in Detroit.

One of the more interesting initiatives is called them "Industry Forum." This is not what it sounds like. Rather, it is a series of programs based on improving shop floor processes so as to enhance the quality, cost and delivery (QCD) metrics of suppliers. Within QCD there are seven measures: Not Right First Time; People Productivity; Stock Turns; Delivery Schedule Achievement; Overall Equipment Effectiveness; Value Added Per Person; Floor Space Utilization.

The program is based on methods developed by master engineers from GM, Honda, Nissan, Toyota, and Volkswagen. These methods, aimed at achieving improvements in QCD, were taught by these engineers to Industry Forum engineers, who, in turn, conduct programs, mainly for tier two suppliers.

For example, for process improvement, there is what is called a "Master Class," which is a multiple-day program that helps companies identify problem areas, take corrective actions, and then assure that these improvements continue.

Among the results achieved by participating companies (so far, some 140 have gone through the program, with over 6,000 outfits that could benefit from it remaining) include a 75% reduction in in-line rejects, a 59% reduction in scrap costs, productivity increases ranging from 25 to 124% and floor space utilization improvements of from 21 to 29%.

Building in the U.K."We have 13 car manufacturers, 11 engine plants, 16 commercial vehicle manufacturers, and 24 automotive design and technical centers in the U.K.

"More major vehicle manufacturers are located here than in any other European country; seven volume vehicle manufacturers have plants in the U.K.: Toyota, GM, Nissan, Ford, Honda, Rover/BMW, and Peugeot.

"We have more specialist and luxury vehicle manufacturers in the U.K. than any other country—famous names like Rolls Royce, Jaguar, Aston Martin, TVR, Morgan, and Lotus . . .

"While we do not now have much of a British-owned car manufacturing industry, we do have a vibrant and increasingly successful motor industry in Britain, and our components sector is particularly strong.

"We estimate that around 7,000 companies are active in this area, though the number who focus mainly or wholly on the automotive sector is more like 1,000."—Judith O' Connor, manager, International Trade, The Society of Motor Manufacturers and Traders Ltd. (London).